Relief from Covid-19 and record-low interest rates made a big difference to Americans' finances. Most of the time, that has been true for the younger generation.
In the first quarter of 2022, the total net worth of people born between 1981 and 1996 was $9.38 trillion, up from $4.55 trillion two years before.
The report found that the average net worth of the younger generation increased twofold during the same period.
Nearly half of all Americans fall deeper in debt as inflation increases, and 1 in 5 Americans dodge credit card statements as interest rates spike.
Gen Xers and baby boomers have an average net worth of more than $1 million, but the average net worth of the younger generation is less than that.
Real estate, including primary homes and other property, is more than one third of the total assets of the younger generation.
The first quarter of 2020 had a median US home sales price of $329,000, and the second quarter of 2020 had a median price of $429,000.
The report found that recent home buyers may have significant debt. Home mortgages are the most common form of debt for young people.
I would encourage millennials to focus more on their cash flow than net worth in this stage of their careers.
DJ Hunt, senior financial advisor with Moisand Fitzgerald Tamayo, said that he would encourage the young people to focus more on their cash flow than their net worth.
If monthly mortgage payments prevent them from fully funding their retirement accounts, the young people may lose financial ground in the long run.
Hunt said that the definition of a fully funded retirement account varies by person.
Older people in their 40s should aim to max out their 401(k) contributions at $20,500 in 2022, while younger people should deposit enough to get their company match.
Diversification is the name of the game, especially for younger investors with more time to build assets, according to Eric Roberge.
He suggests 20% to 25% of gross income annually for long-term investments if most of your wealth is home equity
He said that a diversified portfolio will likely provide higher returns in the long term.
Home equity lines of credit, or HELOCs, allow you to borrow from a pool of money over time if you need it, if you are sitting on wealth in your home.
If you have a lot of equity in your home, it's a good idea to have a home equity line of credit.
HELOCs are usually inexpensive to set up, with lower interest rates than credit cards, and there is no cost until you use it. He said it was still a good idea to have one because of the higher interest rates.
All Rights Reserved © 2024
